UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______ to _______ .
Commission File Number: 0-12087
PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Delaware 04-2780287
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(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
- ------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|.
<PAGE>
PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 1999 and September 30, 1998 (Unaudited)
(In thousands)
ASSETS
June 30 September 30
------- ------------
Investments in joint ventures, at equity $ - $ 1,507
Cash and cash equivalents 1,125 13,867
Accounts receivable - affiliates - 345
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$ 1,125 $ 15,719
======== =========
LIABILITIES AND PARTNERS' CAPITAL
Losses of joint venture in excess of
investments and advances $ 143 $ -
Accounts payable - affiliates - 878
Accounts payable and accrued expenses 33 72
Partners' capital 949 14,769
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$ 1,125 $ 15,719
======== =========
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
For the nine months ended June 30, 1999 and 1998 (Unaudited)
(In thousands)
General Limited
Partner Partners
------- --------
Balance at September 30, 1997 $ (205) $ (982)
Net income 3 251
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Balance at June 30, 1998 $ (202) $ (731)
====== =========
Balance at September 30, 1998 $ (45) $ 14,814
Cash distributions - (15,019)
Net income 12 1,187
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Balance at June 30, 1999 $ (33) $ 982
====== =========
See accompanying notes.
<PAGE>
PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
STATEMENTS OF INCOME
For the three and nine months ended June 30, 1999 and 1998 (Unaudited)
(In thousands, except per Unit data)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues:
Interest and other income $ 54 $ 40 $ 328 $ 159
Expenses:
Interest expense - 10 - 10
General and administrative 53 125 224 242
------- ------ ------- -------
53 135 224 252
------- ------ ------- -------
Operating income (loss) 1 (95) 104 (93)
Partnership's share of gain
on sale of operating
investment property 968 - 968 -
Partnership's share of
ventures' income (losses) (118) 109 127 347
------- ------ ------- -------
Net income $ 851 $ 14 $ 1,199 $ 254
======= ====== ======= =======
Net income per Limited
Partnership Unit $ 24.12 $ 0.40 $ 33.98 $ 7.20
======= ====== ======= =======
Cash distributions per
Limited Partnership Unit $ 90.00 $ - $430.00 $ -
======= ====== ======= ========
The above net income and cash distributions per Limited Partnership Unit
are based upon the 34,928 Units of Limited Partnership Interest outstanding for
each period.
See accompanying notes.
<PAGE>
PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the nine months ended June 30, 1999 and 1998 (Unaudited)
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
1999 1998
---- ----
Cash flows from operating activities:
Net income $ 1,199 $ 254
Adjustments to reconcile net income to
net cash used in operating activities:
Interest on note payable to affiliate - 10
Partnership's share of gain on sale of operating
investment property (968) -
Partnership's share of ventures' income (127) (347)
Changes in assets and liabilities:
Accounts receivable - affiliates 345 -
Accounts payable - affiliates (878) -
Accounts payable and accrued expenses (39) 14
--------- -------
Total adjustments (1,667) (323)
--------- -------
Net cash used in operating activities (468) (69)
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Cash flows from investing activities:
Distributions from joint ventures 2,745 794
Additional investments in joint ventures - (4,056)
--------- -------
Net cash provided by (used in) investing
activities 2,745 (3,262)
--------- -------
Cash flows from financing activities:
Proceeds from note payable to affiliate - 4,000
Distributions to partners (15,019) -
--------- -------
Net cash (used in) provided by financing
activities (15,019) 4,000
--------- -------
Net (decrease) increase in cash and cash equivalents (12,742) 669
Cash and cash equivalents, beginning of period 13,867 2,165
--------- -------
Cash and cash equivalents, end of period $ 1,125 $ 2,834
========= =======
See accompanying notes.
<PAGE>
PAINE WEBBER INCOME PROPERTIES FIVE
LIMITED PARTNERSHIP
Notes to Financial Statements
(Unaudited)
1. General
-------
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in the
Partnership's Annual Report for the year ended September 30, 1998. In the
opinion of management, the accompanying financial statements, which have not
been audited, reflect all adjustments necessary to present fairly the results
for the interim period. All of the accounting adjustments reflected in the
accompanying interim financial statements are of a normal recurring nature.
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles
which requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities as of June 30, 1999 and September 30, 1998 and revenues and
expenses for the three- and nine-month periods ended June 30, 1999 and 1998.
Actual results could differ from the estimates and assumptions used.
The Partnership is currently focusing on potential disposition strategies
for the remaining investment in its portfolio. Although no assurances can be
given, it is currently contemplated that a sale of the Partnership's Seven
Trails investment is expected to be completed by the end of calendar year 1999.
A sale of the remaining property would be followed by an orderly liquidation of
the Partnership.
2. Related Party Transactions
--------------------------
Included in general and administrative expenses for the nine months ended
June 30, 1999 and 1998 is $68,000 and $76,000, respectively, representing
reimbursements to an affiliate of the Managing General Partner for providing
certain financial, accounting and investor communication services to the
Partnership.
Also included in general and administrative expenses for the nine months
ended June 30, 1999 and 1998 is $10,000 and $5,000, respectively, representing
fees earned by an affiliate, Mitchell Hutchins Institutional Investors, Inc.,
for managing the Partnership's cash assets.
Accounts receivable - affiliates at September 30, 1998 represented the
Partnership's remaining share of the net sale proceeds and operating cash flow
to be received from Greenbrier Associates subsequent to the sale of the
Greenbrier Apartments (see Note 3). Such amount was received during the quarter
ended December 31, 1998. Accounts payable - affiliates at September 30, 1998
represented the co-venturer's remaining share of the net sales proceeds to be
distributed from the sale of the Carriage Hill Village Apartments and adjoining
land. Such amount was distributed during the quarter ended December 31, 1998.
3. Investments in Joint Ventures
-----------------------------
The Partnership has an investment in one joint venture at June 30, 1999
(four at June 30, 1998) which owns an operating property as more fully described
in the Partnership's Annual Report. The joint venture investments are accounted
for using the equity method because the Partnership does not have a voting
control interest in the ventures. Under the equity method the assets,
liabilities, revenues and expenses of the joint ventures do not appear in the
Partnership's financial statements. Instead, the investments are carried at cost
adjusted for the Partnership's share of the ventures' earnings and losses and
distributions.
On September 10, 1998, Greenbrier Associates, a joint venture in which the
Partnership had an interest, sold the property known as Greenbrier Apartments
located in Indianapolis, Indiana, to an unrelated third party for $11,850,000.
The Partnership received net proceeds of approximately $5,498,000 after
deducting closing costs of approximately $119,000, closing proration adjustments
of approximately $424,000, the repayment of the existing first mortgage loan of
$5,400,000 and related accrued interest of approximately $26,000 and a payment
of approximately $383,000 to the Partnership's co-venture partner for its share
of the sales proceeds in accordance with the joint venture agreement. As a
result of the sale of the Greenbrier Apartments, the Partnership made a special
distribution of $100 per original $1,000 investment, or approximately
$3,493,000, on October 1, 1998 to unitholders of record as of the September 10,
1998 sale date. The remaining net proceeds from the sale of Greenbrier of
approximately $2,005,000, along with an amount of the Partnership's cash
reserves, were used to help pay off a $4,000,000 demand loan that the
Partnership had obtained from PaineWebber Capital, Inc., an affiliate of the
Managing General Partner, as discussed below.
On September 21, 1998, Randallstown Carriage Hill Associates and Signature
Partners LLC, a joint venture and a limited liability company in which the
Partnership had interests, sold the property known as Carriage Hill Village
Apartments and adjoining land located in Randallstown, Maryland to unrelated
third parties for an aggregate sale price of $37,350,000. The Partnership
received net proceeds of approximately $8,481,000 after the receipt of a credit
of $1,168,000 for property adjustments and escrows held by the Department of
Housing and Urban Development (HUD) for tenant security deposits, real estate
taxes, property insurance and replacement reserves, and after deducting closing
costs of approximately $757,000, the assumption of the existing first mortgage
loan of $27,298,000 and a payment of approximately $1,982,000 to the
Partnership's co-venture partner for its share of the sales proceeds in
accordance with the joint venture agreement. Of the total proceeds received by
the Partnership, $4 million represented a reimbursement of funds originally
advanced to buy out the selling co-venture partner's interest in the Carriage
Hill joint venture on June 23, 1998. The Partnership had borrowed the $4 million
required to complete the buyout of the selling partner's interest from an
affiliate of the Managing General Partner. The $4 million related party loan was
repaid on September 11, 1998 from a combination of cash reserves and the
Partnership's share of the net proceeds from the sale of the Greenbrier
Apartments as discussed further above. On February 18, 1999, the Partnership
received final documentation from HUD for the assumption of the HUD-insured
first mortgage loan by the buyer of the Carriage Hill property. As a result, a
special capital distribution was sent to the Limited Partners on March 15, 1999
from the sale of the Carriage Hill Village Apartments in the amount of
approximately $8,383,000, or $240 per original $1,000 investment.
On June 14, 1999, Amarillo Bell Associates, a joint venture in which the
Partnership had an interest, sold the Bell Plaza Shopping Center to an unrelated
third party for a net price of $6,600,000. The Partnership received proceeds of
$2,140,000 after the assumption of the outstanding first mortgage loan of
$3,113,000, closing costs and proration adjustments of $171,000, and the
co-venture partner's share of the proceeds of $1,176,000. In addition, the
Partnership received $117,000 upon the liquidation of the joint venture, which
represented its share of the net cash flow from operations through the date of
the sale. The net proceeds received by the Partnership from the sale of Bell
Plaza were distributed to the Limited Partners as part of a Special Distribution
of $3,143,520, or $90 per original $1,000 investment, paid on June 28, 1999 to
unitholders of record as of the June 14, 1999 sale date. Of the $90 total,
$61.27 represented net proceeds from the sale of the Bell Plaza Shopping Center,
$6.84 represented cash flow from Bell Plaza's fiscal year 1999 operations
through the date of sale and $21.89 represented Partnership reserves which
exceeded future requirements.
The following condensed combined summary of operations for the three and
nine months ended June 30, 1999 includes the operating results of the remaining
joint venture, which owns the Seven Trails West Apartments, and the operating
results of the Bell Plaza Shopping Center through the date of sale (June 14,
1999). The condensed combined summary of operations for the three and nine
months ended June 30, 1998 includes the operating results of all four joint
ventures referred to above:
CONDENSED COMBINED SUMMARY OF OPERATIONS
For the three and nine months ended June 30, 1999 and 1998
(in thousands)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
Rental revenues and expense
recoveries $ 1,110 $ 2,998 $ 3,667 $ 8,876
Interest and other income 48 174 181 513
------- ------- ------- -------
1,158 3,172 3,848 9,389
Property operating expenses 562 1,301 1,484 3,617
Interest expense 449 1,016 1,255 3,257
Depreciation and amortization 466 687 1,118 2,063
------- ------- ------- -------
1,477 3,004 3,857 8,937
------- ------- ------- -------
Operating income (loss) (319) 168 (9) 452
Gain on sale of operating
investment property 905 - 905 -
------- ------- ------- -------
Net income $ 586 $ 168 $ 896 $ 452
======= ======= ======= =======
Net income:
Partnership's share of
combined income $ 550 $ 109 $ 795 $ 347
Co-venturers' share of
combined income 36 59 101 105
------- ------- ------- -------
$ 586 $ 168 $ 896 $ 452
======= ======= ======= =======
<PAGE>
The Partnership's share of the combined income of the joint ventures is
presented as follows on the accompanying statements of income (in thousands):
Three Months Ended Nine Months Ended
June 30, June 30,
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
Partnership's share of
ventures' income
(losses) $ (118) $ 109 $ 127 $ 347
Partnership's share of
gain on sale of
operating investment
property 668 - 668 -
------- ------- ------- -------
$ 550 $ 109 $ 795 $ 347
======= ======= ======= =======
In addition to the Partnership's share of gain from the sale of the Bell
Plaza Shopping Center of $668,000 recognized in fiscal 1999, the Partnership
recovered a $300,000 allowance for possible investment loss on the Bell Plaza
investment which increased the total gain on the sale of its Bell Plaza
investment to $968,000.
<PAGE>
PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information Relating to Forward-Looking Statements
- --------------------------------------------------
The following discussion of financial condition includes forward-looking
statements which reflect management's current views with respect to future
events and financial performance of the Partnership. These forward-looking
statements are subject to certain risks and uncertainties, including those
identified in Item 7 of the Partnership's Annual Report on Form 10-K for the
year ended September 30, 1998 under the heading "Certain Factors Affecting
Future Operating Results," which could cause actual results to differ materially
from historical results or those anticipated. The words "believe," "expect,"
"anticipate," and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which were made based on facts and conditions as they existed as of
the date of this report. The Partnership undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Liquidity and Capital Resources
- -------------------------------
Subsequent to the third quarter of fiscal 1999 sale of the Bell Plaza
Shopping Center and the fourth quarter of fiscal 1998 sales of the Greenbrier
and Carriage Hill apartment properties, the Partnership's remaining investment
property is a multi-family apartment complex known as the Seven Trails West
Apartments, located in St. Louis, Missouri. As previously reported, the
Partnership has been focusing on potential disposition strategies for the
remaining investment in its portfolio. Although no assurances can be given, it
is currently contemplated that a sale of the Partnership's Seven Trails
investment could be completed by the end of calendar year 1999. The sale of the
remaining property would be followed by an orderly liquidation of the
Partnership.
On June 14, 1999, Amarillo Bell Associates, a joint venture in which the
Partnership had an interest, sold the Bell Plaza Shopping Center to an unrelated
third party for a net price of $6,600,000. The Partnership received proceeds of
$2,140,000 after the assumption of the outstanding first mortgage loan of
$3,113,000, closing costs and proration adjustments of $171,000, and the
co-venture partner's share of the proceeds of $1,176,000. In addition, the
Partnership received $117,000 upon the liquidation of the joint venture, which
represented its share of the net cash flow from operations through the date of
the sale. The net proceeds received by the Partnership from the sale of Bell
Plaza were distributed to the Limited Partners as part of a Special Distribution
of $3,143,520, or $90 per original $1,000 investment, paid on June 28, 1999 to
unitholders of record as of the June 14, 1999 sale date. Of the $90 total,
$61.27 represented net proceeds from the sale of the Bell Plaza Shopping Center,
$6.84 represented cash flow from Bell Plaza's fiscal year 1999 operations
through the date of sale and $21.89 represented Partnership reserves which
exceeded future requirements.
On September 10, 1998, Greenbrier Associates, a joint venture in which the
Partnership had an interest, sold the property known as Greenbrier Apartments
located in Indianapolis, Indiana, to an unrelated third party for $11,850,000.
The Partnership received net proceeds of approximately $5,498,000 after
deducting closing costs of approximately $119,000, closing proration adjustments
of approximately $424,000, the repayment of the existing first mortgage loan of
$5,400,000 and related accrued interest of approximately $26,000 and a payment
of approximately $383,000 to the Partnership's co-venture partner for its share
of the sales proceeds in accordance with the joint venture agreement. Because
the first mortgage loan secured by the Greenbrier Apartments was scheduled to
mature on June 29, 1998, the Partnership and its joint venture partner had begun
to review both refinancing and sale opportunities during the latter part of
fiscal 1997. During the first quarter of fiscal 1998, the Partnership and the
co-venturer agreed to initiate a marketing program for the possible sale of the
property. During the second quarter, the Partnership and the co-venturer engaged
a national real estate brokerage firm to market Greenbrier for sale. As part of
the formal marketing campaign, which began in early March 1998, the property was
marketed extensively. Sales packages were distributed to national, regional, and
local prospective purchasers. As a result of these sales efforts, several offers
were received. Management then asked the prospective purchasers to submit best
and final offers. Management subsequently received best and final offers from
five of the prospective buyers. After completing an evaluation of the final
offers and the relative strength of the prospective purchasers, the Partnership
and its co-venture partner selected an offer and negotiated a purchase and sale
agreement. As a result of the sale of the Greenbrier Apartments, the Partnership
made a special distribution of $100 per original $1,000 investment, or
approximately $3,493,000, on October 1, 1998 to unitholders of record as of the
September 10, 1998 sale date. The remaining net proceeds from the sale of
Greenbrier, of approximately $2,005,000, along with an amount of the
Partnership's cash reserves, were used to help pay off a $4,000,000 demand loan
that the Partnership had obtained from PaineWebber Capital, Inc., an affiliate
of the Managing General Partner, as discussed below.
On September 21, 1998, Randallstown Carriage Hill Associates and Signature
Partners LLC, a joint venture and a limited liability company in which the
Partnership had interests, sold the property known as Carriage Hill Village
Apartments and adjoining land located in Randallstown, Maryland to unrelated
third parties for an aggregate sale price of $37,350,000. The Partnership
received net proceeds of approximately $8,481,000 after the receipt of a credit
of $1,168,000 for property adjustments and escrows held by the Department of
Housing and Urban Development (HUD) for tenant security deposits, real estate
taxes, property insurance and replacement reserves, and after deducting closing
costs of approximately $757,000, the assumption of the existing first mortgage
loan of $27,298,000 and a payment of approximately $1,982,000 to the
Partnership's co-venture partner for its share of the sales proceeds in
accordance with the joint venture agreement. Of the total proceeds received by
the Partnership, $4 million represented a reimbursement of funds originally
advanced to buy out the selling co-venture partner's interest in the Carriage
Hill joint venture on June 23, 1998. The Partnership had borrowed the $4 million
required to complete the buyout of the selling partner's interest from an
affiliate of the Managing General Partner. The $4 million related party loan was
repaid on September 11, 1998 from a combination of cash reserves and the
Partnership's share of the net proceeds from the sale of the Greenbrier
Apartments, as discussed further above.
On June 23, 1998, the Partnership and its original co-venture partner,
JBG/Carriage Hill Village Limited Partnership, purchased the 50% interest of its
other co-venture partner, Signature Carriage Hill Village Apartments Limited
Partnership, in the Randallstown Carriage Hill Associates Joint Venture. The
Partnership had held a 40% interest and the original co-venture partner had held
a 10% interest in the Joint Venture prior to this transaction. The Partnership
contributed $4,048,000 and the original co-venturer contributed $1,012,000 to
complete the purchase of the other partner's interest. After the purchase, the
Partnership held an 80% interest and the original co-venture partner held a 20%
interest. On March 19, 1998, the Partnership was notified by Signature that it
would be exercising the "buy/sell" provision in the Joint Venture agreement.
Under the terms of this provision, this co-venturer, which was admitted to the
Joint Venture as part of a 1988 restructuring transaction, had to propose a
price at which it would either purchase the other partners' interests in the
Venture or agree to the sale of its interest in the Venture to the other
partners. The Partnership and its original co-venture partner in the Carriage
Hill Joint Venture had 45 days to decide whether to sell their interests to the
exercising partner or acquire the interest of the exercising partner at the
specified gross sale price for the Venture's assets of approximately $33.3
million. At an equivalent gross sale price of $33.3 million, the net proceeds to
the Partnership for the sale of its interest would have been approximately
$700,000 after the assumption of the outstanding first mortgage debt of $27.4
million, the exercising partner's preferred investment return of approximately
$5 million and the original co-venturer's share of the proceeds of $200,000.
After a thorough review and analysis, the Partnership and the original
co-venturer notified the exercising partner on May 1, 1998 of their decision to
buy its interest for approximately $5 million in cash.
Because the Partnership believed that improvements in the apartment
segment of the real estate market would allow the Partnership to achieve a
higher net sale price now than may be possible in the future, the Partnership
and its remaining co-venture partner held discussions concerning the near-term
sale of the Carriage Hill Village Apartments immediately after completing the
purchase of the selling partner's interest in June 1998. Subsequently, the
Partnership and its co-venture partner selected a national real estate firm with
a strong background in selling apartments. Preliminary sale materials were then
finalized and extensive sale efforts began in late June 1998. As a result of
those efforts, ten offers were received. After completing an evaluation of the
offers and the relative strength of the prospective purchasers, the Partnership
and its co-venture partner selected an offer. On July 24, 1998, a purchase and
sale agreement was signed and a non-refundable deposit of $100,000 was made by
the prospective purchasers. The Carriage Hill sale allowed the Partnership to
return approximately $3.7 million more in net sale proceeds and property
escrows, after the repayment of the $4,000,000 buyout advance, than the $700,000
the Partnership would have received had it not acquired the selling co-venture
partner's interest. On February 18, 1999, the Partnership received final
documentation from HUD for the assumption of the HUD-insured first mortgage loan
by the buyer of the Carriage Hill property. As a result, a special capital
distribution was sent to the Limited Partners on March 15, 1999 from the sale of
the Carriage Hill Village Apartments in the amount of approximately $8,383,000,
or $240 per original $1,000 investment.
The occupancy level for the Seven Trails West Apartments averaged 95% for
the quarter ended June 30, 1999. The Partnership and its Seven Trails co-venture
partner held discussions during the fourth quarter of fiscal 1998 concerning
potential opportunities for a near-term sale of this 532-unit multi-family
apartment complex, and agreed to market the property for sale. During the first
quarter of fiscal 1999, the Partnership and its joint venture partner selected a
local brokerage firm with a strong background in selling apartment properties in
the St. Louis area. Preliminary sales materials were prepared and extensive sale
efforts began in late November 1998. The property was marketed to national,
regional and local buyers of apartment properties. As a result of those efforts,
over 20 offers were received and 13 prospective purchasers were then requested
to submit best and final offers. These prospective buyers submitted best and
final offers, all of which were in excess of the property's 1997 year-end
appraised value. After completing an evaluation of these offers and the relative
strength of the prospective purchasers, the Partnership and its co-venture
partner selected an offer. A purchase and sale agreement was signed with this
prospective buyer on March 21, 1999. However, a sale transaction could not be
completed as the prospective buyer could not obtain the necessary financing to
complete the purchase. The Partnership and its co-venture partner subsequently
renewed discussions with the other interested bidders and, on May 12, 1999,
negotiated a purchase and sale agreement with one of these parties. This
prospective buyer completed its due diligence work in July and made a
non-refudable deposit of $750,000. The sale transaction is expected to close by
September 15, 1999. However, since this sale remains contingent upon formal
approval by the mortgage lender of the loan assumption and the buyer fulfilling
its obligations under the sale contract, there are no assurances that a sale
transaction will be completed.
At June 30, 1999, the Partnership had cash and cash equivalents of
$1,125,000. Such cash and cash equivalents will be utilized for the working
capital requirements of the Partnership and for future capital contributions, if
necessary, related to the Partnership's remaining joint venture. The source of
future liquidity and distributions to the partners is expected to be from cash
generated by the Partnership's income-producing property and from the proceeds
received from the sale or refinancing of this property or from the sale of the
Partnership's interest in the joint venture. These sources of liquidity are
expected to be sufficient to meet the Partnership's needs on both a short-term
and long-term basis.
As noted above, the Partnership expects to be liquidated prior to the end
of calendar year 1999. Notwithstanding this, the Partnership believes that it
has made all necessary modifications to its existing systems to make them year
2000 compliant and does not expect that additional costs associated with year
2000 compliance, if any, will be material to the Partnership's results of
operations or financial position.
Results of Operations
Three Months Ended June 30, 1999
- --------------------------------
The Partnership reported net income of $851,000 for the three months ended
June 30, 1999, as compared to net income of $14,000 for the same period in the
prior year. This increase in net income of $837,000 was primarily due to the
Partnership's share of the gain recognized in the current period on the sale of
the Bell Plaza Shopping Center of $968,000, which included the recovery of a
$300,000 allowance for possible investment loss on the Bell Plaza investment
which had been recorded in fiscal 1990. In addition, there was a favorable
change of $96,000 in the Partnership's operating income (loss) for the current
three-month period. The favorable change of $96,000 in the Partnership's
operating income (loss) was mainly the result of a decrease of $82,000 in
general and administrative expenses. The decrease in general and administrative
expenses was primarily due to a decrease in certain required professional fees.
In addition, interest and other income increased by $14,000 for the current
three-month period. Interest income for the current three-month period was
higher due to an increase in the Partnership's average outstanding cash reserve
balances as a result of the sale of the Bell Plaza property on June 14, 1999 and
the temporary investment of the net sale proceeds pending the distribution to
the Limited Partners which was paid on June 28, 1999.
The Partnership's share of gain on sale of operating investment property
and the favorable change in the Partnership's operating income (loss) were
partially offset by an unfavorable change in the Partnership's share of
ventures' income (losses) of $227,000. The unfavorable change in the
Partnership's share of ventures' income (losses) was mainly due to the sale of
the three joint venture investments discussed further above, all of which had
net income during the same period in the prior year. In addition, total expenses
increased at the Bell Plaza joint venture during the current period (through the
date of sale) due to the write-off of deferred leasing commissions in connection
with the sale transaction. Net income increased by $41,000 at the Seven Trails
joint venture during the current three-month period mainly due to an increase in
rental income.
Nine Months Ended June 30, 1999
- -------------------------------
The Partnership reported net income of $1,199,000 for the nine months ended
June 30, 1999, as compared to net income of $254,000 for the same period in the
prior year. This increase in net income of $945,000 was primarily due to the
Partnership's share of the gain recognized in the current period on the sale of
the Bell Plaza Shopping Center of $968,000, which included the recovery of a
$300,000 allowance for possible investment loss on the Bell Plaza investment
which had been recorded in fiscal 1990. In addition, there was a favorable
change of $197,000 in the Partnership's operating income (loss) for the current
nine-month period. The favorable change in the Partnership's operating income
(loss) was mainly due to an increase in interest and other income of $169,000
and a decrease in general and administrative expenses of $18,000. Interest
income was higher due to an increase in the Partnership's average outstanding
cash reserve balances as a result of the sale of the three joint venture
investments discussed further above and the temporary investment of the net sale
proceeds pending the distributions which were made to the Limited Partners. The
decrease in general and administrative expenses was primarily due to a decrease
in certain required professional fees.
The Partnership's share of gain on sale of operating investment property
and the favorable change in the Partnership's operating income (loss) were
partially offset by a decrease in the Partnership's share of ventures' income of
$220,000. The decrease in the Partnership's share of venture's income was mainly
due to the sale of the three joint venture investments discussed further above,
all of which had net income during the same period in the prior year. In
addition, total expenses increased at the Bell Plaza joint venture during the
current period (through the date of sale) due to the write-off of deferred
leasing commissions in connection with the sale transaction. Net income
increased by $105,000 at the Seven Trails joint venture due to an increase in
rental income.
<PAGE>
PART II
Other Information
Item 1. Legal Proceedings NONE
Item 2. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
A Current Report on Form 8-K dated June 14, 1999 was filed during the
current quarter to report the sale of the Bell Plaza Shopping Center property
and is hereby incorporated herein by reference.
<PAGE>
PAINE WEBBER INCOME PROPERTIES FIVE LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINE WEBBER INCOME PROPERTIES FIVE
LIMITED PARTNERSHIP
By: FIFTH INCOME PROPERTIES FUND, INC.
----------------------------------
Managing General Partner
By: /s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and Chief
Financial Officer
Date: August 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's unaudited financial statements for the quarter ended June 30, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Sep-30-1999
<PERIOD-END> Jun-30-1999
<CASH> 1,125
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,125
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,125
<CURRENT-LIABILITIES> 33
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 949
<TOTAL-LIABILITY-AND-EQUITY> 1,125
<SALES> 0
<TOTAL-REVENUES> 1,423
<CGS> 0
<TOTAL-COSTS> 224
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,199
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,199
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,199
<EPS-BASIC> 33.98
<EPS-DILUTED> 33.98
</TABLE>
